The proposed amendments to India's insolvency law are expected to bring the Indian bankruptcy system in line with global standards and further strengthen the rescue of distressed companies, according to Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mital.
Speaking at an event organized by the IBBI and Insol India in New Delhi, Mital highlighted the significant impact of the Insolvency and Bankruptcy Code (IBC) since its inception in late 2016. He noted that approximately 32,000 applications involving an underlying debt of over ₹14.5 lakh crore have been withdrawn. This high withdrawal rate suggests that the IBC has improved credit discipline and empowered creditors, who are now able to recover funds or compel debtors to settle dues simply by threatening IBC action. The risk of losing control of their companies once insolvency cases are admitted by the National Company Law Tribunal (NCLT) is a significant deterrent for defaulting promoters.
Mital stated that the proposed amendments, which number around 68-70, are expected to further enhance the IBC's performance once approved by the Parliament.
The government introduced a bill in the Lok Sabha in August of last year to amend the IBC, with the goal of streamlining the resolution process through creditor-led resolutions and establishing frameworks for cross-border and group insolvency. The bill was subsequently referred to a select House committee, which submitted its report last month.
The IBC Amendment Bill 2025 is considered a major overhaul designed to accelerate resolution timelines, empower creditors, and align India's insolvency framework with global best practices. The key proposed amendments aim to reduce delays and enhance creditor control.
One significant amendment involves modifying Sections 7 and 9 of the IBC by replacing "may" with "shall," making it mandatory for the NCLT to admit an insolvency application filed by financial or operational creditors once a default is proven and the application is complete. This change effectively reverses the Supreme Court's ruling in Vidarbha Industries vs. Axis Bank, which granted the NCLT discretion to consider other factors before admitting a case. By removing the NCLT's discretion, pre-admission litigation and delays may be significantly reduced.
The amendment also equips the IBC to handle modern corporate structures by introducing formal frameworks for group and cross-border insolvency. These provisions facilitate the joint resolution of interconnected companies within a group, preserving value and enabling more holistic rescue plans. The cross-border insolvency framework, based on international best practices, will promote cooperation with foreign courts and aid in tracing and recovering assets located overseas. This framework is a momentous milestone in replacing the existing insolvency procedure with better provisions on cross-border insolvency. It holds the promise of significant gains through cross border creditor recoveries, improved judicial cooperation and bringing India closer to global insolvency norms.
